Friday, May 31, 2013

Under Congressman John Kline’s bill on Student Loans interest rates can rise as high
as 8.5% (Stafford Loans)
and 10.5% (graduate and Parent Plus Loans). In addition, it would be harder for
families to do future financial educational planning with interest rates varying year to
year and adds more bureaucracy layers in complex tracking of loans. His
bill also fails to guarantee low rates for student loans while burdening
students with higher debts upon graduation.

Do the
Math$: According to the government’s
own accounting (C.B.O report):

The Government
receives:

12.5 cents in
revenue next year for every dollar lent
through subsidized Staffords

33.3 cents per
dollar in unsubsidized Staffords

54.8 cents on
each dollar of graduate school loans (over half!)

49 cents per dollar
of parent loans

…. for
a government profit last year alone of $51 BILLION!

The
Federal Government currently borrows money at 1.8%...

…then
lends it at 3.4%.

John Kline’s bill is asking for an immediate increase to 4.65% effectively doubling student debt and
profits from the program! Currently, every student graduating with a four
year degree has $27,000
in debt…under Kline’s bill…double it! A student who borrows the maximum amount of subsidized
Stafford loans over five years would pay $4,174 in interest under the current rate, but more than $10,000 under Kline’s
bill (can you say cash cow!).

While
Kline is talking about a ‘market place’ and the ‘value of capital’, we’re
talking about creating a secure America future
for generations of US students as engineers, medical professionals,
business managers, etc. When Kline says, “We
think the market ought to determine the interest rates because it has a better
reflection of what the true value of capital is.” What he’s really saying
is…’Let’s make another government cash cow while college becomes unaffordable to
the average American family’.

Financial Aid for students should NOT operate as new revenue for the
federal government. BTW: The government already makes more on Student Loan Interest
than Ford makes on automobiles.

Congressman Kline (MN-2, R) should be helping to ensure that college remains within reach for all students who rely on federal
loans to pay for their education. Instead Kline is introducing and promoting a
bill that will do just the opposite. Is it any wonder the US only produce 1400 PHDsannually and that number is on the decline? Meanwhile in China, by
government educational investments, 300,000 PHDs have
been paid for virtually by students maintaining a grade point average.

Tell Kline that
education is an investment in our nation’s future, not a ‘market’ for
wall-street profiteers or a ‘cash cow’ to underwrite the government spending.